Traditionally, people must clear all debts by the end of the year, so New Year's Eve is the premier time for yonige. The 80,000 people who fled in the night in 1996 had nearly doubled by 1999, to 130,000, while estimated sarakin debts quadrupled, from about $45 billion to $200 billion. So popular is the Midnight Run that it has spawned a new business, benriyasan («Mr. Convenient»), facilitators who help families flee their homes and who take care of their possessions while they are on the run. In 1999, Japanese television featured a new drama, The Midnight Run Shop, whose hero devises schemes for people to evade gangster loan enforcers. It's a Mission: Impossible for debtors, with each episode featuring a new clever escape: a disc jockey goes on the lam during a live show; a florist evaporates during a wedding.
Sarakin loans are not the only means by which Japan's financial system beggars the public. The nation has no lender-liability laws, leaving the public at the mercy of scam artists who prey on credulous old people and heavy debtors. Most notorious of the scams is so-called variable life insurance. In the late 1980s and early 1990s, banks and insurance companies colluded in selling these policies to homeowners, claiming that they would guard against high inheritance taxes. A homeowner would mortgage his house and invest the proceeds in an insurance policy but was not told the meaning of the word «variable»; namely, that payouts were not guaranteed. When investments made on their policies went south with the collapse of the Bubble, owners of variable insurance found that they owed more on their houses than their policies were worth.
Tazaki Aiko, age sixty-two, was a typical victim. The law prohibits banks from selling insurance, but they got around it as follows: In 1989, a salesman from Mitsubishi Bank began paying Tazaki visits, warning her about the high inheritance tax her family would face. Soon she received a call from someone at Meiji Life Insurance (one of the Mitsubishi keiretsu group of companies), offering her a variable insurance policy Tazaki bought, and seven years later she faced eviction from her home.
Altogether, insurers issued 1.2 million such policies, leading to the public's loss of trillions of yen. In many cases, bankers and insurance-company salesmen were present together at the time the contract was signed. Victims have filed hundreds of lawsuits, and some of the plaintiffs have committed suicide. «Suicide is a tempting idea, because the longer you live the larger your debts grow. That is the nature of the insurance,» says Oishi Satoru, the secretary for a plaintiffs' group. Yet to date, despite the damage done to the public, neither MOF nor the courts have punished a single bank or insurance official.
A system that favors gangster-ridden loan sharks as the established means of consumer credit, allows banks and insurance companies to practice financial scams with impunity, rewards savers with near-zero interest rates, and punishes debtors with interest rates of 40 percent and higher – it doesn't take an expert economist to predict what this will do to public savings over time.
Nor is the damage limited to individuals. When economists measure «public savings,» they tend to concentrate on how much individual savers put in the banks, and overlook endowed trusts and charitable foundations. Japan s Ministry of Finance, intent on ensuring that labor and money go straight to manufacturing corporations, has discouraged charitable giving and volunteerism. Almost no tax deductions are allowed on charitable gifts, and severe hurdles have made establishing nonprofit foundations extremely difficult.
Yet trusts and foundations represent national wealth in a very real sense. In the United States, by 1998 there were more than 1.5 million nonprofit foundations with annual revenues of $621 billion, accounting for more than 6 percent of the GDP. Nonprofit organizations are so important that they make up their own sector of the economy, known as the «independent sector,» which employs 10.2 million workers. Assets from these foundations are the fuel used to fire start-up companies and boost the capitalization of the stock market. The proceeds fund schools, hospitals, libraries, and myriad other institutions. The IRS grants about $12 billion in tax exemptions to foundations annually, and an additional $18 billion to individuals as charitable contributions-a total of $30 billion. That $30 billion makes up part of America's overall savings, even if it does not belong to individuals or companies.
In Japan, charitable giving is negligible. It stems from the lack of a philanthropic tradition, an undeveloped legal structure to regulate the work of nonprofit organizations, and tax disincentives. Only in 1998 did the government pass a law making civic groups eligible for nonprofit status, but the law provided no tax benefits either to the organizations themselves or to the people giving to them. For the foreseeable future, the lion's share of nonprofit endowment will continue to lie in tokushu hojin and koeki hojin established as amakudari nests for retired bureaucrats and feeding off government money. They are parasites on the national wealth, not contributors to it.
Canny fund managers in the United States have multiplied their funds' assets at fantastic rates. Yale University's assets rose from $3.9 billion in 1996 to $7.2 billion in 1998, while Harvard's rose from $9.1 to $13.3 billion during the same period, the two universities enjoying three-year returns on investments of 84.6 percent and 94.9 percent, respectively. Although these years were a bumper season for the stock market, and endowments do far less well in slow periods, foundation endowments grew tremendously during the 1990s. Meanwhile, Japan's foundations, their money invested in bank accounts earning no interest and in stocks making no yields, withered on the vine. By 1997, the assets of the twenty largest U.S. foundations came to twenty-two times the assets of Japan's twenty largest.
The difference between the United States and Japan is further underscored by the existence of something like the American Cancer Society, which in 1998 had more than two million volunteers, dispensed more than $100 million for research, and had assets of $1.1 billion. There is no private organization in Japan that functions on a scale remotely like this. By the beginning of the twenty-first century, total assets of American nonprofit groups could be estimated as approaching $2 trillion – a hoard of savings that Japan couldn't begin to match. And the difference lies not only in dollars in the bank but in a legal infrastructure and the expertise of millions of people in managing such funds.
It's difficult to compare university-endowment growths, since Japanese university endowments are one of the nation's great secrets – a textbook case of how hard it is to find accurate information in Japan. In the summer of 2000, an extensive search of Web and newspaper databases and more than a dozen e-mails to Web masters and college offices at Tokyo, Keio, Waseda, and Doshisha universities drew a complete blank. However, even without hard figures to go by, any visitor to a Japanese college can see visible evidence – in substandard libraries and run-down facilities – of the beggaring of the universities as a result of low capital returns. In 1995, in the wake of the subway poisonings by the fanatical religious group Aum Shinrikyo, commentators marveled that Aum was able to recruit elite scientists from leading universities, and its facilities were much better. Trying to explain a piece of Aum machinery before a television audience, a professor would say, «Well, the one at my university is ten years old, and not nearly as sophisticated as Aum's, but you can get the idea.»